tv Tonight From Washington CSPAN May 11, 2011 8:00pm-11:00pm EDT
unlocking the power of the carbohydrate rate molecule in this century just as we did the hydrocarbon molecule in the last. we need to bring our natural gas resources forward. we really need to crack the clean coal riddle and find a way to use our huge reserves of clean coal. . we need to keep investing in wind, solar, geothermal. we are creating thousands and thousands of jobs. i represent one of the three solar platforms on the continent. and for the last, oh, my, four decades, gas industry and silk industry, have been transforming and creating companies like first solar, which was the hottest stock on wall street a couple years ago, companies involved in green energy
production. is it perfect yet? no. but neither was edison's light bulb where he invented it in ohio. and we are about to put his statue in the hall. america has to think about a full set of energy sources and not be sold dependent on just one that for whatever reason, lack of competition, probably, but also abuse of power, has just come to play too important a role in our economy. it hurts our people too many times over and over and over and over again. 50% of what we could actually save in energy comes through more judicious consumption. we tried to provide incentives for americans to put in new kinds of windows, new building materials coming on the market,
new types of insullings -- insulation. and using the full energy of the sun. we are much smarter about the way we are building than even 20 years ago. and those improvements need to continue. imagine in america there was a roof that had solar sunshine. where we captured the power of the wind and properly stored it and moved it to grid. imagine an america where what you put in your tank, if you put something in your tank to fuel it, it's grown in renewable in this country. imagine an america where you have plug-in hybrids and our gas stations become a different type of fueling station. that is all possible. we are working through the u.s. department of defense and i will end with this, because i believe
the department of defense knows better than any aspect of our society what we paying as an oil hostage. our soldiers are deployed all over the world and very close to oil reserves. i think they're worth more than that. i think their genius can be used inside the boundaries of this country to make us energy independent. our energy dependence is making us vulnerable. the marines is taking the lead inside the department of defense in trying to create new solutions, not just on their own bases but as their troops move around the world, i salute the navy, some of the incredible inventions they are coming up with, to move power from one point to another with not a loss of kilo what the. some of the work that is being done inside navy today.
i congratulate the air force in helping push america forward in terms of its ability to power itself internally and i salute the u.s. army. your work on solar, your work in trying to capture the power of the earth to power the system that you are involved with today is something that is absolutely technologically amazing. you inspire us all. and there is a way for america not to be so dependent on those who would extract from us, but, in fact, use our genius to restore our liberty and independence again. imagine how many jobs we could create in this country if we could bring our military back home and spend the trillions of dollars that have been spent in oil-producing foreign lands here at home, literally. we could rebuild the
transmission grid of this country from one end to the other. we could bring up the jean yuss of patent -- genius of patent holders and put that money to work for the american people. they deserve it. god bless america. god bless the future of this country. i yield back my remaining time. the speaker pro tempore: the chair is prepared to recognize the gentleman from iowa, mr. king, for 30 minutes.
the speaker pro tempore: for what purpose does the gentlelady from ohio seek recognition? ms. kaptur: i do now move that the house adjourn. the speaker pro tempore: the question is on the motion to adjourn. those in favor say aye. those opposed, no. the ayes have it. the motion is adopted. accordingly the house stands adjourned until 10:00 a.m. tomorrow for morning hour debate.
>> congressman rogers brings a wealth of experience to his chairmanship. he served in the army. he served in the michigan legislature. he has also been in the private sector. i think all those issues will be relevant to our conversation. to turn your gadgets off -- that means all the way off, not on beep or vibrate. this meeting is on the record. it is being recorded. the entire session is on the record. the congressman will offer his remarks for about 15 minutes.
then we will engage in a question and answer session together. about 8:30, will open the floor to your questions. we'll ask you to wait for the microphone, introduce yourself and your affiliation. the congressman will be talking to us today about the implications, the lessons, the significance of the successful attack on osama bin laden. we look forward to those remarks. we welcome you, mr. chairman. >> thank you. good morning. it is great to be here. i appreciate the opportunity and the offer. i thank you for your work in the intelligence business as well. i know you did some liaison work. in this business, they change actor nam's more than a change their underwear.
-- they change acronyms more than they change at their underwear. [laughter] thank you for being here. it is always good when you walk up to give the speech when jane harman, who is a good speaker, says, "do not screwed this up." [laughter] i am honor to see the national security adviser for ronald reagan here. thank you for being here. i see paul bremer in the audience -- a former ambassador. my wife worked with you in iraq for quite a while. thank you for sending her back in one piece. we appreciate that very much. i want to talk a little bit about where we are. before i talk about where we are, i want to talk about where we came from. 10 years ago on the date of 911,
the intelligence community was very different than it is today. a very different. it had suffered huge losses in the '90s. in some places in the world we had no coverage whatsoever. wheat closed up shop in a lot of places. they used the intelligence committee for the opportunity for a peace dividend and the fall of the soviet union. we saw leading up to 9/11 what a serious mistake that was. we saw that the problems that were inherent in the strengthening organization and its ability to continue to do its mission -- they became hunkered down they conquered down in a place where information sharing was different -- they hunkered down in a place where information sharing was different.
it was not personality-based. it was legally-based -- the ability to share information to grand juries was a crime. i do not look good in those orange jumpsuits with the numbers across the front. what that meant was the culture that was developed was developed because the planes in the road and the rules in the road prevented those things from happening. over time it became known that you do not talk to each other. it is a legal prohibition to do that. that culture was ingrained in law, policies, and the institutions. you have a shrinking intelligence community. intelligence is too risky. we are going to eliminate large numbers of our intelligence committee. really, it led to 9/11. the whole1 happened,
notion of who is responsible or who do we blame started. at the same time, something remarkable happened. all of our intelligence agencies realized that they were not prepared for what was facing them. the integration started. we saw technology that did not exist 10 years ago that is, today, absolutely critical to the success of those emissions. it is integrated in a way i have never seen before. the case that we saw last week, up to me, is a great example of how it can work. but i caution best -- it was one successful operation in what is a long and hard fight against al qaeda, its affiliates, and those who want to do harm to the united states. we have heard calls that this is the opportunity to do it just like that every time and
dismantle other large parts of the intelligence business. it cannot be further from the truth and we need to take the lessons from the '90s as we move forward. let's look at what happened. 10 years ago the target was osama bin laden. they had and osama bin laden unit in the cia prior to this. its function was to understand, steady, and validate what they really had. they have some events that were concerning to them. africa bombings, the uss cole, tower bombings -- all of those things have an impact, but none of it had stretched across the ocean and tapped the united states directly. when it 9/11 happen, it took a unit that was obscured and made it important. "we realized it was we did not have enough human intelligence, we do not have the ability to touch people easing the correct language in the correct place as
often as we would like, our ability to have signal collection in places where we need it was lacking. it was very washington, d.c. centered to the rest of the world. we did not coordinate as well as we could with the n.g.a. and other intelligence platforms that we had. it did not happen in that way. something pretty amazing started. we started taking people off of the battlefield and we gave them interrogations'. think about why that was important. i had a senior intelligence official tell me a couple of years ago that about 70% of what the intelligence community understands the about operations, recruiting, finance, weapons movement, how they raise money, what the propaganda unit looks like, and all of those things, including what their relationship is with the hakani
network came out of this first year's interrogation. all of them. that is important because if you want to get to the next place, you have to understand who they are and how they operate. five years ago to an interrogation a small piece of information came out. an arabic name applied to an alias name. pretty difficult. that is about all the information they had that may have been tied to one of the career networks used by osama bin laden. it is more than they had in a long time. they started building on that case using every piece of intelligence technology and human intelligence we had. sources became incredibly important. we try to keep defining who this might be or what a physical description was or what operational status they may have. signal intelligence got better
and our ability to get signal intelligence got better. small conversations ended up reaping big rewards overtime to try to convert to new to identify who, what, when, and why. our ability to use overhead industry, battered -- overhead technology. if you have ever seen a pin board on potential leads, you can imagine that thing lit up like a christmas tree. many joked that bin laden was set a burger king in kalamazoo, michigan. guess what? there is a pen right there on that map. they decided to follow every lead at every time, i do not care how small, large, or outrageous -- they would spend time to figure out if there was truth to that particular lead. they say that the largest
grossing starbucks in the united states is at cia headquarters. there is a reason for that. they are open up a lot. there is a lot of people drinking a lot of coffee, falling a lot of leads. most of them went nowhere. most of them were dry holes. most of them actually took us away from where the target may be. then that one lucky break using all the pieces. every little piece got better. one interrogation that you the nickname. the next that you a home town or a real family and name. the next piece identified where that person might be working. all of that led to a very lucky event when they were able to follow a particular individual to a certain compound. it did not fit the characteristics. some called a mansion. some called it another thing. it clearly did not fit the characteristics of the town it
was in. they put a special unit -- an isolated unit even in the counter-terrorism unit -- and decided they would have the equivalent of a pursuit team and analyze everything at the next level of. they analyzed all the resources we had with all the agencies we had to apply on that particular target. we wanted to know everything. in the next few months, they started to everything. the complete patterns of life. all of the things you would hope they would know so that someone could make a very good decision to say, "yes, that is probably osama bin laden. we better go get him." all of the things, the lessons, and the operation itself came from something that came before it. the elite special forces team did two and three rates per night when they're working in iraq and afghanistan, most like
the same kind of compound. the operation was similar to other operations which gave them a high degree of confidence and combat experience and operational experience to pull off something that was a little bit trickier than the other. that was an incredible feat. the agency's ability to keep getting closer and closer with sources of information or people who were wittingly or unwittingly providing information about patterns of life. our ability, electronically, to pick up such a small think that might benefit that whole operation. it all happened because we learned from what happened before. there is some notion this was put together at the last minute based on a few months or even a few years of planning is ridiculous. why that is so important is now that this success, albeit a very public success, they call had
started for changing the shape of the intelligence business -- changing the mission in afghanistan -- changing how we do things. this is the only way we should conduct operations -- move forward when we are trying to break the back of al qaeda. we have to take the lessons of the '90s and applied them today. we have all the tools that were laid out -- the patriot act. this year we will do a fiscal year 2011 bill that will allow the intelligence committees to do proper oversight in the first time. authorities and the leadership is important. leo panetta has done a wonderful job. not only did he engaged the chairman of the big eight level of the the process, but when resources were needed or were not needed, when we needed to move resources in order to accommodate, all that came from
a working relationship. in the past few years, the committee became almost dysfunctional in its ability to provide that leadership and assistance and oversight to the community because of the intense partisanship. might ranking member -- my ranking member and i said we would take camp -- we would take partisanship as much as the committee as we possibly can. there is a benefit of not having a reporter sitting in that office. those of us in the committee know how important that is, that you have that dialogue and that debate and come to an agreement before moving forward. we are going to look at all the successes here on the 10th anniversary of 9/11, including catching osama bin laden. we've had some great ones -- a network that was completely different.
as we get focused sometimes on emissions, we forget that agencies are working lots of other very serious problem sets at the same time. the network from 2006 was a major coup for the intelligence community and stop a serious problem for us, our international security interest, and the world. that network was growing rapidly. it had a very different flavor from any proliferation you might see out of north korea. it was culturally based. it was pride base. it was not necessarily cash based. it includes some of the failures we still have to pursue and understand what they happen. in iraq, the wmd assessment was wrong, but so was our assessment in libya. they had a very robust nuclear
weapons program. they had a very robust nuclear -- chemical stockpile. they had a very robust biological weapons program. we did not know about any of it. we had a very limited view and analytical product about what -- where libya at once. rolm in iraq. wrong in libya. -- wrong in iraq. it shows you that we must continue to integrate. we must continue to integrate technology. one of the biggest problems we have today, i in the last 10 years we have developed a way to obtain such information, we cannot get through it. we are going to have smart access for those who need access to material so we do not have the wikileaks disclosure and we are going to have technology applied to large databases that will allow us to have a software
based analytical product so when human eyes take a look at it, it encompasses more information than they can possibly pull through in short order. it will stop the ability to be wrong on iraq. it decreases the opportunity to be wrong on iraq and wrong on libya. it increases our ability to be right on iran and exactly right on north korea. a lot of speculation in the past few years about where they were. we see information every day that points to our analyst were right about iran's intentions. the same with north korea. while they're making a deal with us to stop their program and take food aid, there clearly engaged in pursuing weapons of mass destruction at an aggressive rate. again, one of the purposes for agreeing to do this was to put
it in context about where we came from in history and how we got to where we were last week. we need continued oversight of the community. we have already seen pressure on the page yet -- patriot act. one of the great analogies i heard on the way over is when the doctor gives you your regiment of medicine, if you take half of it and think you are better, he would get sick again. this is about taking all of our medicine. al qaeda is alive and well. they are hurt and damage. they're inspirational and operational leader has been taken off the battlefield. it is a huge opportunity for us. the confusion for them is an opportunity for us. this is the opportunity to step on the gas and brake their back.
we are going into the political season. there will be lots of people disclosing information they should not be talking about when we are continuing to pursue. at the end of the day, we will take this opportunity to analyze from stem to stern, are our analyst doing the right thing? what is the problem? why did we miss of the times square bomber, the detroit, when we knew they were kettles of information that would have helped us in that. we are still not there yet. we will continue the integration with our analyst. we'll continue our ability to share information in a way that gives smart access. we will continue to make sure we are funded at the right level. this is the riot -- wrong time to back all funding the intelligence community when they are very close to technological breakthroughs that will make our analytical products exponentially better by getting
analyst to far more information. our fiscal year 2011 makes that down payment. fiscal year 2012 and -- 2012 intelligence bill comes out next month. we'll continue to make that investment. it is one of the few minor items coming out of the house that will be a slight increase because it is an investment in technology and people. lastly, all the politics of interrogation have crept into our political space, it is important to understand that leadership on these issues from the top to the bottom was equally important to be osama bin laden capture. good on the president for taking a look at the information and opera -- and authorizing the operation itself. at the same time, we need to make sure that all of the policymakers from the executive branch -- executive branch to
congress understand that all of the things that led up to osama bin laden have to be improved upon and they need to have the leadership behind them so they can continue to produce the kinds of information that will get us zawahiri and continue to break their backs. this is our chance to break the back of al qaeda. it is no opportunity for us to retreat. >> thank you, mr. chairman. [applause] if you would like to settle in, we will get it started with a few questions. one of the observations you made is that we do not catch all of them. he gave the example of the domestic terrorist incident. i wonder if we could focus for a net on the committee -- for a
minute on the committee structure on the hill. new committees had the haleh security responsibility. they are the ones who had a lead on some of the questions on the domestic, the integration of the fbi, etc.. how do you relate to the other committees that have a part of national security? what is working and what needs to be addressed in terms of congress' organization? >> one of the big complaints coming out of the 9/11 commission -- if you have never been in the executive branch, one of your big frustrations is the big committees. that is a long-term problem for congress to fix. we will have to deal with it eventually. probably not any time soon.
those battles are some of the most fierce fights i have ever seen. they make other parts of politics look like child's play. what we have done in the committee, i changed the rules of this year for the first time to allow three members of the appropriations committee to be full partners without a vote into the committee. they have declarants this. they sit on the committee -- they have the clearances. they sit on the committee. that is one step closer to what the 9/11 commission had intended. they participate in our classified briefings. it that way we can have a discussion with someone who sits on appropriation on all of the issues and programs in a way that gets us to a better conclusion. i think it helped us already on the 2011 bill and will help us on the 2012 bill.
we have reached out and are doing joint efforts with armed services, which has not been done before, to try to work out the military intelligence portion, which is huge. it is sometimes larger than the national intelligence budget. we have better integration. haleh security we do not deal with as much, -- homeland security we do not deal with as much. it is a big switch to go from "i am going to put somebody in jail" to " i am going to look for this person for 10 years." it is something we have been working with. we have done our own outreach to try to solve that problem. i am not sure exactly -- i am
take it would take an act of congress to fix congress. i do not think we are ready publicly to realize this committees in the way i think it should be done. it probably will not happen anytime soon. >> you talked about the successful integration across the intelligence of disciplines that were inspired by the lessons of 9/11, partly by the intelligence reform legislation of 2004, and the creation of the office of the director of national intelligence. the think that reflects well on topics other than terrorism? >> it had a rough start, i think. it had a rough assignment to try to bring together all of the intelligence services. there have been positive things that have come out of it. the president's daily brief is removed from the cia. now you have much more participation. i think you get a better
product that the president has an opportunity to see. there is more input than there used to be. it used to be guided to the cia plans. i think that is a good outcome. i do think we have finally gotten it. there was a lot of argument about how big it should be. we got back to what really is the mission of the office of the director of national intelligence? if we can focus that mission on the sexy things in the intelligence world, it could be hugely successful. when we get there, the size of that will come into line with what the mission is. we are doing a review and have to present that very soon. if anything came out of that, one of the things that congress said was that you have to share information better. that clearly has happened.
the directorate said we are going to put this out there and share it. it was a little risky. we think we can fix that problem, but it promoted information sharing across the intelligence community like had never happened before. if those two outcomes came out, i'd think that was very helpful. >> everybody is going to be expected to tighten their belts. you said at the end that you thought the intelligence budget could be stable if not increase a little bit. one of the issues that affects the tolerance for budget increases when everyone else is cutting is the level of public support. i note that all the diplomacy side, many people believe that because there is not a domestic constituency.
military officers are seen as very heroic, but sometimes the civilian side is not necessarily popular. is serving on the intelligence committee popular with your constituents? had you think the american public feels about intelligence? if it were the only part of the budget going up, the think the american public would support that? >> i do think the american public supports the intelligence services. nothing more exemplifies that than when you see something like the osama bin laden success. that was a 10 year success story. we invested a lot of money in the process of, not just that particular event, but the ability to do exactly that. i do think americans see that and interpret that as we are the number-one intelligence
service in the world. politically, it does not do much for you. it is hard to go to a town hall meeting and say, "i am the chairman of the intelligence committee. i cannot talk about it." [laughter] i think americans do see it for what it is and the value. intelligence is playing a more important role in policy making decisions then i think i have ever seen in my time in congress or before. it has the real time essence of how the world is changing. it means you have to take real time changes in washington, d.c. without good, accurate, well- analyzed intelligence it makes our job that more difficult and more likely we will make a mistake. it is critical that we continue a robust intelligence service. that being said, i actually brought in auditors for the
first time to go through budget audits to try to find things we thought we could change, that we could get savings on. it has been very effective. we think we have saved a couple hundred million dollars this year alone in merging programs enforcing programs to come together. we get to peer over all of the silos. sometimes you can see what one silo is doing and what the other silo is doing looks often -- awfully similar. we have been able to merge that together and get some savings. >> i am open it up to -- i am going to open it up to you. >> thank you. welcome. i am enjoying my new service here. two things.
first, in your remarks you did not mention the intelligence reform legislation of 2004, but alan ask you about it. it was passed over the opposition of secretary of defense donald rumsfeld and the chairman of the armed services committee, duncan hunter. we had to make some compromises, but it was bipartisan legislation that originated in the house intelligence committee. your predecessor played a courageous role in pushing it forward. my question is this -- the director of national intelligence gets credit for helping him leverage and create the same business that was necessary to put the clues together that were the predicate for finding of somewhat bin
laden. i think you would agree with that. i think you would agree that we need to continue to do that among other things. my question is, we seem to be much better at doing that horizontal late at the federal level. your former fbi -- you are a former fbi died. you get the fact that we have to share intelligence vertically from the federal level down to our communities. from there i think we still have problems with over classification and less leadership then we might need because if we are going to find the next attack and hopefully prevent a disruption in our country, we need fully informed law enforcement at the local level. my question to you is how can we do better with vertical information sharing using the tools at hand and using the oversight that congress can provide? >> that is something that we
wrestle with. the department of homeland security has tried to take this role and take classified information, put it in a format which is readable and unclassified, and get it out to joint terrorism task forces. my only concern was that maybe we went too fast. you might have the joint terrorism task force and eight fusion centers within a few miles of each other in some places in the country. it is hard for local law enforcement to supply the people to these task forces. they are judged by assaulting burglaries, homicides, and other crimes. this is a more nebulous concept that we are going to help prevent something. i am not sure i know the answer other than we need to continue
to take that information. i would argue that we need to look at how we do yet and have restructured them. we could probably do it in a more efficient way. i think we ought to have a hard look at it and see if we cannot consolidate it and find a way to get information that is usable. we had what i called the need to know with whom to share. we got in a big rush that everybody had to know everything. that is not the right answer either. one of the systems we are working on that can help with that and came is having the ability for smart access systems. -- end game is having the ability for smart access systems. we probably really do not need to know what is going on in yemen unless there is a nexus.
without the nexus, you could not get another wikileaks. that problem would go away, but it would still continue this notion that i have access to everything. you take that and try to find something that -- yes, it is something that is important for detroit. probably not something that is important for maine. that is the next phase. it will look more efficient. >> back in 2005, someone was retiring from mi6. he said the time to exchange information was today. i was wondering if he shared that view with you are not. >> there has been some big
changes in hell week share multilaterally. -- how we share multilaterally. we could do a whole hour on that and how we develop the resources for better cooperation. we share information with people you may be surprised. we have been able to get by on who the common enemy is. we tried to do that as fast as we can because we have found over time that with good relationships we get better information as well. our british, australian, a canadian friends or some of our best partners in the war on terror. -- are some of our best partners in the war on terror. this is that part of leadership i talked about. when there are problems, you can see it manifest itself in these liaison services. we have had experiences in the
last year or so because of relationships with certain countries that filters down our ability to share information with liaisons'. it is a top-down leadership. you do not want to offend our british friends. they are important partners to the united states in the war on terror. i have 300,000 to 400,000 pakistani males that travel every year. they are worried about it. that means we are worried about it. we need some robust relationships. they are integrated here in the united states. we are integrated there in the united kingdom. it works great. the problem is, we have to be consistent up and down the pipe,
sharing information that should not be shared means that people stop sharing information with us. i am tried to talk around it the best i can. there have been instances when information was shared that caused the liaison partners to say if you continue to do this, we will stop talking. >> i am from the atlantic council. i wanted to ask, did you know about the osama bin laden raid beforehand? secondly, i wanted to ask about iran. what in your view has been the most effective set of tools against the iranian nuclear program? where do you think they are? thank you. >> while. look at the time. [laughter]
leon panetta has done an exceptionally good job at the cia. maybe it is a product of being a former member, but he is good about understanding how valuable a partnership can be with the intelligence committee. he has done that. when i became chairman, i had a dinner and a briefing to come over and go over where we were back in january about what the possibilities were. at that time, it was 40% to 50% certain that that was do it was. he kept us in the loop. we had to move some money. all that was well done on behalf of the cia director. i think it was more effective at the end of the day. at the cia, i am sure general petraeus will do a great job. i told leon i was not sure i
would talk to him anymore. on the second part, this is one of those interesting areas where early on there were policy differences about how you approach iran. you had other countries with other equities who work for more aggressive, who were leaning far more aggressively, that maybe it did not line up with where the united states was a couple of years ago. there was just some misalignment about how aggressive we wanted to be. you can imagine how israel was. go around the rim and you get as many different opportunities and suggestions about how we go about this as you could possibly imagine. some of what you had seen over time, because there has not been at one single focused plan on how we get there -- i think that is a lack of u.s.
leadership on this issue. we have to lead this effort. we should be sitting at the head of that table, discussing those ideas, and talking about it with our european allies, iran's neighbors, who are equally terrified as israel is. i think we can come suit some approaches on this thing. we have not done that. i think that needs to happen i think there will be other things that may not be as coordinated as well as they should have. >> the gentleman in the middle? >> i want to be a little ian.ar he singled out the experience that american special forces have gained through operations
in iraq that help prepare for their success in last week's rate. he also taught, i presume, about the enhanced terror -- enhanced interrogation methods that led to bin laden. what if america had not pursued a war in iraq? what if they had done the the persons inon custody? do you think it would have taken the united states 10 years to find information on bin laden's whereabouts? beyond that, the policies of the united states that had been pursued over the last 10 years, whether it be the unbridled support of israel and it's very controversial region, how do you see your role in looking at american-born policy and whether different approaches may
have led to different conclusions? >> that would be great if you messed everything that happened before the 1990 bombing in new york. as i said, the african bombings, the uss cole -- the way we were operating then did not work. they're getting more aggressive and more bold. they were recruiting. they were using those successes. the barracks bombing -- we dealt with that. all of those successes led them to be more bold, to recruit more people. there was no guantanamo bay. there was no interrogations'. there was not much of anything going on against al qaeda, bin laden, and his network. we felt it was going better, stronger, and more sophisticated.
9/11 was a result of, i argue, not having an aggressive policy and not understanding the threat of al qaeda and what their true intentions were to, not only the united states -- they have killed more muslims than they had killed westerners. there is some notion we are going to go back to the way it was and that somehow this is going to go away. i think it is a naive at best. that is why we have found such good partners in muslim countries to say, "you are right. they have to give." they are as dangerous to a muslim family as they are to an american family. that has been our success. i did not talk about interrogation techniques. you brought it up. but all the interrogations that were conducted over time -- if you take someone off of the battlefield, you are going to talk to them.
guy. a former fbi d all this interrogations' netted and vote that helped us get smarter about who they work. everyone that you talk to, you -- they give you the opportunity to solve that next big problem for our efforts to break the back of al qaeda. yes, i thing we should be interrogating people. having this policy that we are prosecuting the cia officer to engaged in interrogations lawfully and then celebrate the fact that that information may have contributed to the fact that we got bin laden is ridiculous. we do need to have a place to put them. if we get them off of the battlefield, where do we put them? guantanamo bay is the one facility that is not only
protected from people getting out, but also from outside people getting an. -- people getting in. in afghanistan, they took 500 fighters out of a tunnel. i think we have to shake ourselves out of this notion about political cycles when we talk about information. this is been a decades-long problem. we saw how it worked under the old system and we see how it works under this system. under this system, osama bin laden is dead. >> thank you, mrs. chairman. given that there is an investigation going on right now and to whether or not there was official pakistani complicity in the harboring of osama bin laden, do you think it is incumbent on the
administration to publicly acknowledge if there is evidence produced of pakistani complicity, that they should make that public? the american people have a right to note that the man who was responsible for 9/11 was being harbored by another government? should that be made public or, given the nature of the u.s.- pakistani relationship, should that evidence remain classified and not released? >> interesting question. pakistan is one of the most confusing relationships we have with another country. when i talk about the liaison relationships, they are very important. the army is in the tribal areas for the first time since it became a nation. the tribal areas are treated as a semi autonomous area under the constitution.
there have been thousands and thousands of casualties in that fight. they have helped us arrest some 600 al qaeda and at taliban leadership. everybody from bomb makers to finance years to weapons dealers and everything in between. those are the days you think, this is a good ally. this is somebody we need to be a partner with. at the same time, they signed a treaty with someone who had immunity status. unbelievable for a country who wants to join the rest of the world as a law-abiding country. you have at least the notion about bin laden and why was he able to -- clearly he had a logistics network. what they knew is something we are asking lots of questions about. we do know that the frontier corps is riddled with
sympathizers to the taliban, mostly because it is familiar. they have a family ties across the tribes in the area. that has presented a huge problem. we know that certain i.s.i. members have a sympathy towards the taliban and other networks. you have all of those problems all going on at the same time. it is a confusing place. our national interests have not lined up. pakistan has not come to the conclusion that the taliban and al qaeda is a bigger threat than india. they believe india is their problem. that has been our struggle all along. they look at this as, "we would like to help. we are going to try to help. had elected india lately? that is a real problem." that is the struggle we have had with pakistan.
we need to understand. i think it is inherent as our relationship continues that we know who, what, when, and why about osama bin laden being in this compound for as much as five years. we we should all understand that. today, from all that i have seen, we cannot conclusively say that some of the senior new and promoted a safe haven. clearly, there may have been elements that new and looks the other way, but we cannot say the institutions yet new and looked the other way. we will know that, i believe. this is a good opportunity for pakistan to say, listen, this was embarrassing. let's move forward. there's a lot we can do together and let's talk about all the things i can do together to
break the back of the counter terrorism threat. clearly, that information will be made public, if it is true. i do not think you can contain it. you have the political side of pakistan talk as much as most of the leaks that come out of there. police came out of the pakistanis, not out of the u.s. government. >> we have a few more questions. we have tralee stevenson then a person in the back. >> many years ago i helped write the law that requires the president to make a finding and notify congress of -- when there will be a covert operation.
using their operations and to be conducted solely by defense department -- do you think there are operations that can be conducted solely by the fence department personnel? >> in title 50, military operations versus intelligence operations, they get reported. we need to do some work. they're great examples. the osama bin laden operation, from stem to stern, it used elite special forces unit to carry out the final act. there are other places in the world where there is some confusion over whether should be a total 10 a person or a title 50 a person. yes. we will review that. we have a -- we will have an opportunity to go over pretty carefully, case-by-case, some that we can talk about and some that cannot.
i do believe that yet to be very careful about in power in the military to do things under title 50 without the same reporting and covert action. we watched that like a hawk. this is something we do not lead get too far away because it is the most sensitive and is fraught with the most opportunity for something to go wrong. so we want to pre closely. the military said -- the military peace seems to be missing. -- the military piece seems to be missing. >> in the back. >> thank you very much. i come from that region. thank you very much.
my question is -- pakistan is telling the government and the military is telling its people that they have shared information with the united states at some level leading to osama bin laden in a compound. how does the united states think that intelligence was shared? if it was not, do you think there's a need for pakistan to be sincere on that front with the united states? second, how much is the tricky relationship between pakistan and the u.s. reaction out this particular time now that questions are raised at the pakistan government level on sincerity? it is difficult to aid the military of pakistan in the fight against terror. >> pakistan has been helpful in the past.
it should come as no surprise to anyone to say that they have shared information in the past that may have ultimately led to osama bin laden's whereabouts. i cannot say that i could dispute that. the problem has come with the fact that, if they knew he was there and if they did not pass along that little tidbit of information, that is a huge problem. again, they have on-again and off-again. they have been helpful. some detainee's that they take into custody, we get into -- some detainees that they take into custody, we get access to and some not. i hope we look at this -- we will go back and do the forensics on all of this. that will happen. how does this happen? that we have a full and complete
picture. but i hope to do not spend a lot of time on a particular portion. this is the time for pakistan and the united states to say, all right, done deal. osama belated is gone. we have lots and lots of work to do -- osama bin laden is gone. we have lots and lots of work to do. we believe they may have some logistical role in the bombings and india. all of those things will still happen. the taliban leadership is still a threat not only to our soldiers, the u.s. soldiers and our allies in afghanistan, but, when they invaded swat, that was the first time they had gone into a settled area pakistan. when this happens, we want to be your friends. but this has to be transparent,
open relationship where we both fully understand the threat of taliban and al qaeda elements. this is where we take that opportunity to get there. i think you probably know better than anyone of the internal political debates that are happening in pakistan today. it is not one heck of a lot of difference that may not down drag out presidential election season. pakistan is suffering that same thing. the smallest thing gets blown up into a bigger than proportionate event. in pakistan, it causes them to make bad decisions about full cooperation with the united states. we will help them try to get through that if we can. >> regrettably, we have run out of time. the council has asked me to mention that next week will be the ceo of the volkswagen group, jonathan browning. i want to thank the chairman for a fascinating hour. [applause]
journal," texas congressman joe barton on offshore oil drilling and tax subsidies for oil companies. house intelligence committee member adam schiff discusses u.s. intelligence strategy in afghanistan and iraq. and bill allison of the some light foundation on foreign governments lobbying efforts in the u.s. -- of the sunlight foundation on foreign governments lobbying efforts in the u.s. >> c-span's comprehensive resources on your elected officials with the daily schedules, a full list of members, each day's committee hearings, plus video of house and senate sessions and the progress of bills and notes. @ c-essional ,kriegel span.org/commerce. -- congressional chronicle at c-
span.org/congress. >> the perils of global legalism. he will take your calls, e-mail, and tweets. >> the heads of at&t and t mobile work on capitol hill today to argue in favor of at&t's $39 billion bill to acquire its rival t-mobile. randall stevens you appeared before the senate judiciary antitrust subcommittee. he said that the merger will increase to -- will lead to increased competition and eliminate drop calls. but it is argued that it would create the nation's second and fourth largest wireless companies. >> today, we meet to consider a merger that is likely to have
profound implications on how americans communicate. the proposed merger between at&t and a t-mobil will bring together two of the four largest cellphone carriers to create the largest cell phone network with an estimated 43% market share. a will control close to 80% of the national cellphone market. creating such a huge market shares in an already concentrated industry, it is up to you to justify why we should do it. an industry that began in 1980 is as luxury car phones used mainly by business people have become a way that we mainly communicate. there are nearly 300 million subscribers. cell phones are increasingly the main with that millions of consumers connect to the wealth of information on the internet. as anyone knows who has ever observed people in social
events, we are fast becoming a nation addicted to the bright screens of our mobile phones. just a few years ago, cell phone competition was a bright spot for american consumers. consumers had the choice of no fewer than six major national cellphone companies. as a result, aggressive competition led to declining prices and to the rollout of ever-new services. today, the situation is quite different. this deal with leave us with only three national companies. at&t and verizon would control 80% of the market. it would end up with just a cell phone wobbly. an industry that -- a cellphone duopoly. we must ask if such a vital
sector left with only two companies is good for our country. what will the absence from the market, from the lower priced t mobil mean? will at&t and verizon gain a stranglehold on the spectrum that competitors needed? emerging companies argue that the proper way to analyze this merger is at the local level, where the presence of regional carriers as to the number of competitors. but we must remember that these are mobile phones, which consumers use while traveling. in order to provide this service, these regional companies must pay rowling fees to connect their customers to the national phone networks owned by their competitors. does the fact that the small
regional companies to pay at&t and verizon millions of dollars in rowling fees seriously harm their ability to compete? can they compete with the national giants without offering the most up-to-date phones? at&t also asserts that this deal will enable it to serve many rural areas so that it will cover 97% of the nation. on this point, we must ask whether it is necessary for at&t to merge with one of its three main competitors in order to do this? could it achieve this laudable goal by spending some of the $39 billion it will spend to acquire t mobil to expand its network instead. in closing, the same rules of economics and common sense apply in this industry as in all others. four competitors are better than three. the more competitive providers
for cellphone service, the lower the price, the better the quality of service, and the more innovation that results. we must almost -- we must also keep in mind that the cell phone industry is a highly profitable and rapidly growing business. the burden will squarely fall on at&t and t-mobile to convince us why this merger is desirable, how it will benefit consumers, and to put aside our concerns that it may turn out too well hurt competition. now i will turn to a ranking member senator lee for his opening remarks. >> thank you, mr. chairman. given the large number of witnesses that we have participating in this hearing and the complexity of the issues we will be confronting, will keep my opening remarks as brief as possible so we can have as much time as many for questions. the mobile phone market is a critical part of the nation's economy. according to some estimates, it is directly responsible for more than two hundred 50,000 jobs.
it generates over $150 billion in economic activity each year. it accounts for nearly $25 billion in annual capital investment. it is difficult to overstate the increasing importance of mobile devices in the lives of almost all americans. many people rely on wireless phones as their principal means of communication. more than a quarter of the population has become a wireless-only households. mobile devices are also increasingly a primary means by which individuals access the internet. next year, smartphone sales are expected to be greater than the combined sales of both the desktop and laptop computers. this explosion in demand for wireless services has led to significant capacity constraints that have affected the entire country. most of us are too familiar with dropped calls throughout the industry and occasionally sluggish data speeds.
the strength of available wireless networks is a vital to individuals, families, schools, businesses, public safety organizations, and virtually all aspects of modern communications. with the current capacity crunch in mind, the obama administration announced last year, in the national broadband plan, the goal to lead the world in mobile innovation with the fastest and most extensive wireless networks of any country. an important question before our subcommittee today is whether the proposed merger between at&t and t-mobile is a positive step along the path toward a world class were less broadband network throughout the united states? there are a number of reasons to believe that the merger could contribute to the school. in many respects, at&t and t.s. mobile are unique in having roughly compatible networks -- t-mobile are unique in having roughly compatible networks. a merger between the two companies may provide significant and immediate efficiencies that will enable to enhance service quality, fewer
dropped calls, and increasing data speeds. ultimately, the entire wireless industry will require additional spectrum to address the some -- the significant growth in broadband services. until such spectrum is available, the benefits of this proposed merger will enable at&t to roll out its 4g network. at&t has committed to provide this wireless brought in service to 97% of the u.s. population. 4g nationwide networks provide enhance ability. the u.s. wireless marketplace is, in many ways, less concentrated than in other industrialized nations. some suggest that our national interest would not be served by restricting the american marketplace to a larger number of spectrum-start providers,
or-equipped to bebuild advanced networks. -- spectrum-starved providers, ill-equipped to build for advanced networks. the combination of at&t and t- mobile would create the largest wireless carrier in the nation with roughly 42% of all wireless subscribers in the united states. it would leave the market with only three, rather than four, major nationwide carriers that account for the vast majority of total subscribers in america. a critical question, therefore, is whether the smaller regional carriers can effectively compete in a post-merger market, helping to discipline prices, preserve consumer choice, and promote innovation? two potential roadblocks to
robust competition needs special attention. first, regional carriers would limit holding for debtor roaming access outside their local areas. although a recent fcc order mandates that major carriers offer commercially reasonable data roaming agreements, the terms and conditions of these agreements will largely determine whether smaller carriers can become a true competitive force in a nationwide market. second, regional providers are often at a competitive disadvantage in gaining access to the most popular and desirable handsets in the system. national providers with large volume and advertising budgets are better positioned to negotiate exclusive contracts for cutting edge devices, like the iphone, and lower prices for other items purchased in bulk. in addressing these and other issues related to the competition a small regional carriers, we would do well to
remember the antitrust paradox -- competition must be understood as the maximization of consumer welfare. our analysis of the proposed merger between at&t and t-mobile should be guided by what will be best for consumers. that would be in the form of prices, service quality, and ultimately range of choice. thank you, mr. chairman pierre >> thank you, mr. lee. we turn -- thank you, mr. chairman. >> thank you, mr. lee. >> i think you both for holding this hearing. i will ask consent that the number of my questions be submitted for the record. we are also doing a hearing in the appropriations committee with our military that is a matter of some interest these days. i have to be there, but i want to talk about the competitive
impact of at&t's proposed acquisition of t-mobile. they would combine the nation's second and fourth largest providers in wireless communications. that would have the lasting impact on the wireless industry. the present four companies have nearly 90% of the wireless market in the nation. this acquisition would further consolidate an already concentrated market for wireless communication. i am particularly concerned about what this acquisition may mean in rural parts of the state, rural parts of the country, a state like mine, vermont. it is primarily rural. we still do not have wireless service. i live 5 miles from our state capital. it is on a dirt road. it was only very recently there was even able to get a modest
form of high-speed internet. the two communities on either side of me each have it. our town did not. but we are typical of so many other places. at&t began providing service in vermont just a few years ago, after the department of justice required verizon to sell spectrum. it was acquired as part of another merger. the department scrutiny of that merger led to access to the iphone for the very first time. they should provide similar consumer benefits and other acquisitions in this industry. today, wireless carriers contend they shortage of available spectrum. they urge to expand wireless service. in vermont, experts summit that
both at&t and t-mobile have large blocks of unused spectrum in rural areas, places where emergency responders have no way of communicating. still, both at&t and a t-mobile argue that their combined spectrum will allow them to provide a larger number of consumers with wireless technology than either of them could independently. within two years, this acquisition, it is proposed demo -- this acquisition, it is proposed, will provide more service. knowing how slowly things have moved in the past, i hope you
will forgive me if i am a bit skeptical. the questions that i will have on this issue, i would urge at&t and others to respond in writing. i look forward to hearing more details on the basis of that representation. i want assurances that at&t will follow through on those proposals. customers who had never considered at&t or t-mobile as a viable option in my home state, at the same time, t mobil owns a great deal of wireless spectrum across the green mountains, spectrum that was being billed out by t-mobile in order to quell its footprint in vermont. at&t also owns a great deal of wireless spectrum in vermont. it is not being used. while i am impressed with their
billed out today, i will give them a compliment for that. but i worry that many rural areas in our state will continue to be left behind, with or without this acquisition. this is extremely important. if we are going to create jobs in many parts of our state, one of the first dates that we hear from companies that want to go there is what kind of wireless do we have here? there is no doubt that at&t and t-mobile are at the forefront of innovation in the wireless market. each company has a history of developing new and creative and amazing ways to enable consumers to communicate wirelessly. but is this history of innovation -- but it is this history of animation that highlights the importance of the antitrust laws. i am concerned about jobs, not just in vermont, but throughout the country. i expect the department of
justice and the federal communications commission to conduct an exhaustive and careful analysis of this acquisition and its impact on competition. certainly, the judiciary committee will pursue to do that. but the analysis should include the impact of proposed taxes on consumer prices and whether the acquisition will stifle or promote innovation. i expect the justice department is wary of creating a market for additional companies need to merge in order to survive. again, i think you, mr. chairman for holding this hearing. it is extremely important. >> we will now turn to our ranking member, senator grassley. >> clearly, this is a very important matter that will get more attention as time goes on. i appreciate arguments that i have read in support and
arguments that oppose the merger. there is still much to learn. in the grassroots america, people are beginning to take notice of this because, in three of my 33 town meetings that had this spring recess, this issue came up and people ask me what i thought of it. it was just announced at that particular time. obviously, characteristic of me, -- and characteristic of me, i did not have an answer to that one. -- uncharacteristic of me, i did not have an is to to that one. this is something that, in rural america, will particularly get attention. i am looking for to the testimony will receive today. i hope the witnesses can explain the impact of the combined at&t and t-mobil will have on
consumers through prices, competition, and access. as you all know, there are many rural areas of the united states that are concerned about service, particularly in my state of iowa. i want to hear about how the proposed merger will help residents in my state gain access and more dependable wireless services. i will have questions along those lines. i will also have questions along the lines of whether it will increase rates and whether it will help spur more consumer choice. mr. chairman, i will be back and forth between this committee and the finance committee. we have a hearing right now on the colombian free-trade agreements that -- agreements. but i would like to come back and answer questions without losing my turn if i could. thank you. >> thank you very much, senator grassley. we would like now to introduce our panel of witnesses. our first witness to testify says mr. randall stevenson. he is the chairman of the board
and ceo of at&t. next, we will hear from mr. philip hum. he has served as chief reason officer and executive committee of t-mobile international. next, we will hear from daniel hennesshessey. he is chairman of the wireless association. our fourth witness will be few nihugh mina. he was recently elected chairman of the board of the rural cellular association. next, we will hear from gigi stone. -- gigi sohn. finally, we will hear from larry cohn.
we thank you all for appearing at our subcommittee hearing to testify today and we ask our witnesses to rise and raise their right hands as i did minister the oath. do you all confirm that the testimony you are about to give before this committee is the truth, the whole truth, and nothing but the truth, so help you god? thank you. mr. stephenson, we will begin with you. we asked that the panelists limit their comments to 5 minutes. mr. stevenson. >> thank you, chairman cokohl. i appreciate get to need to talk with you about the benefits of this potential transaction. this transaction is about
consumers. is about keeping up with consumer demand specifically. most important, it is about giving consumers what they expect, if you were dropped calls, faster speeds, and access to high-speed fourth generation internet service, whether they live in a large city, a small town, or out of the country. over a short time, just in the last four years, we have seen a major revolution in wireless. smartphone and mobile apps have exploded. mobile usage has sorted. innovation has cycled at an amazing pace. the economy has benefited and our network, more than any other, has carried the load. volume shot up by 8000%. to meet this demand over the same for years, at&t invested more in the united states than any other public company. some $75 billion in capital.
we continue to invest in a very rapid pace. the demand is already honest and it is in the form of tablets and services like mobile high- definition video. in 2015, just four years from now, by the middle of february in 2015, we estimate that our network will carry as much mobile data traffic as we carry the entire year in 2010. that is eight times to 10 times higher than where we are today. that is an indication as to how fast the mobile internet is growing. just about the only thing that we know about that can slow this cycle of innovation and growth is the lack of capacity to meet that demand. that is whether such a focus right now on spectrum. i do applaud the sec and congress on this particular issue. as jankowski has said, if we do nothing in the face of the looming specter of a crunch,
many consumers will face higher prices as the market is forced to respond to supply and demand and frustrating service. i do not think any of us want those things. but the fact is that, even with everybody's focus and efforts, it will be several years before significant amounts of new spectrum are placed into service. that is just a reality we face. to meet growing consumer demand, we have to find ways to get more capacity from existing spectrum. that is exactly what this combination will do. our two companies are very complementary. combining them will create much more network capacity than if we were operating them separately. more capacity means improved service, fewer dropped calls, your blocked calls, and a faster, more reliable mobile internet experience. it is the basic concept that, in any industry, greater capacity is the fundamental driver of competition and innovation. the u.s. wireless marketplace is one of the most competitive in
the world and will remain so after this transaction. over the past decade, u.s. wireless prices have steadily and dramatically come down. this transaction allows that trend to continue. with this transaction, we're committed to providing mobile internet service to more than 97% of the u.s. population. that is nearly 55 million more americans than our pre-merger plans and more than any other provider has committed before. we all understand the benefits this can bring to small towns of rural communities, in areas like education, health care, and general development. we will deliver these benefits with the only unionized work force of any major carrier in america. current t-mobile customers will be able to retain their existing rate plans and they will gain access to lte service which was not considered before. some of the reasons this transaction has won strong support from unions, consumer,
minority, and local representatives as well as some other industry experts. thank you very much for your time. >> thank you, mr. stevenson. mr. humm. the management of t-mobile has implemented a new strategy that will have company-back to growth. reid turning the business to growth, -- returning the business to growth, it will not be enough to strategic future.
spectrum is becoming constrained to our business. with t-mobile facing spectrum exhaust in the next couple of years in a number significant market, our spector holdings will not allow us to launch -- our spectrum holdings will not allow us to launch our team. in addition to these and resourced strategic issues, deutsche telekom is not in a position to finance the necessarily large-scale investment in the u.s. 40-mobile to remain competitive. the combination -- in the u.s. for t-mobile to remain competitive. the combination can reach excessive synergy while greatly benefiting the american economy,
consumers, and particularly t- mobile customers. t-mobile customers will enjoy improvements in the coverage through access to at&t's loeb and spectrum. with the acquisition, the gigolo band -- low band spectrum. add t-mobile, you already use 850. customers will be about to take a vantage of these improvements shortly after the transaction closes. second, the transaction will result in net for quality improvement 40-mobile customers. as a result of compatible technologies, the combined company will be able to quickly
emerge the network and a full spectrum. significant operating efficiencies will be achieved. 14-mobile customers, this will mean better coverage, fewer dropped calls, and more consistent data downloads, especially at peak times and in high demand locations. third, the transaction will also give the combined company the resources and spectrum it needs to boldly deployed next generation lte devices. by combining the spectrum of both companies, the entity will be able to support lte and gsm and gsa +.
the transaction will allow the combined company to increase capacity and significantly reduce costs, which will drive prices down and enhance opportunities for innovation. the wireless market is very competitive. approximately three-quarters of americans today live in areas contested by least five facilities-based wireless providers. this highly competitive marketplace will ensure the consumers across the board benefit from the enormous cost savings at at&t. we expect increased competition to drop prices.
to conclude, i am confident that the mobile customers will experience significant and tangible benefits from the proposed combination with at&t, both immediately and longer term. they combine customers and the american government into services faster than in neither company could provide on its own and the competition that has -- that it has in the industry will continue. thank you for your time. i welcome any questions you might have. >> thank you, mr. humm. >> mr. hessy. >> thank you for the opportunity to address the potential negative consequences that at&t 's takeover of t-mobile can have on american consumers, in addition, and the economy. i would like to focus on how a
vertically-operated duopoly will function. sprint has a stake on the impact this acquisition will have on an industry that is fostering innovation and competition. sprint was born out of competition. we operate in an open and competitive environment where innovation drives and technological advances in devices -- in devices grow rapidly. an open and competitive averment benefits my company and every person that owns a wireless device. the competitive environment -- it took 100 years to build 1 billion fixed so much, but only 20 to add 5 billion mobile subscribers. at the end of 2010, there were 210 mobile subscriptions. robust competition is driving prices down and quality of, so
much so that, one-quarter of all adults in 2010 lived in wireless homes. the impact of this competition on our economy has been profoundly positive. there was $25 billion in capital investment. if the industry remains competitive, productivity gains in the next 10 years will amount to almost $860 billion in additional gdp. creating an entrenched integrated duopoly will reverse this and stifle the innovation of the industry. in the 1990's, the firms that became sprint and became t- mobile entered in competition to make a noticeable difference. at&t's acquisition of t-mobile will turn back the clock on wireless competition.
let's examine with the twin bills would control in a duel ballistic -- nin a duopolistic world. two companies would control most of the nation's vast infrastructure. with control of nearly 80% of the market, the twin goals could discourage manufacturers from partnering with anybody else for the next generation of smart phones and tablets. two companies would largely control industry pricing by controlling about 80% of the market. there would have significant, and checked leverage to increase prices for voice and data. today, sprint and t-mobile have applied down pressure to pricing. the regional providers that at&t refers to as competition have less than 5% of the total post-
basis subscribers and cannot influence prices. beyond what the bills would control, this acquisition does very little to provide the benefits that at&t claims. even without this transaction, at&t has the largest license spectrum's holdings of any wireless carrier in this country. rather than building out of spectrum, at&t is warehousing it. verizon, which has more subscribers than at&t, just weeks ago stated that it had sufficient spectrum to meet its needs until 2015. t-mobile, by contrast, is using its spectrum heavily in which at&t plans to need capacity. at&t does not use the spectrum it has. adding t-mobile spectrum would not give at&t the relief it claims it needs. at&t already has the spectrum, reach, and resources it needs to serve rural america. adding t-mobile extends at&t's
reach to only 10% more of the u.s. population. the wireless industry thrives on competition, which in turn drives investments, innovation, consumer choice, and job creation, and u.s. global leadership in communications. if at&t is permitted to devour one of the two remaining independent wireless carriers while the rest of the world achieves advances in that technology and innovation for the 21st century, the united states could go backwards to last century's ma bell. there are only three beneficiaries of a proposed transaction, the shareholders of at&t, verizon, and the main shareholder of t-mobile -- deutsche telekom. we ask you to just say no to
this takeover. thank you for holding this hearing today. we ask the department of justice and the fcc to say no. i think you for your time and am prepared to answer your questions. >> thank you mr. -- that you, mr. hestohesse. >> thank you for inviting me to be here today. i have been in this industry for 23 years. with a lot of help, i have literally built their company from the ground up. the u.s. wireless industry is at a pivotal point and policymakers will determine the fate of the industry with their decision on whether to approve at&t boss acquisition of t-mobile. over the past several weeks, we have carefully reviewed this -- at&t's acquisition of t-mobile. for the past several weeks, we have carefully reviewed this proposal. it is bad for the economy and it is bad for the consumer.
the remaining non-bulk carriers will patiently wait for their turn to be acquired or bled dry by the biggest two carriers. when i began in this business in the late 1980's, there was a local duopoly in every market. consumers had just two choices for wireless service. this also meant that carriers virtually had no market incentive to innovate or improve service offerings. therefore, this era is remembered one of large brick bones and one of larger customer bills. in a duopoly, the country can quickly reach equilibrium. and commit both providers are reasonably happy with their positions, that is -- and, if both providers are reasonably happy with their positions, that is how it will stay. the u.s. wireless industry began to open up.
competition was important to congress at that time. the fcc auctioned pc is licenses to new entrants to build networks, attract customers, and generally disrupted established markets. duopolies had todemopoli respond. in order to acquire and retain customers, cellular south had to get creative. we did several things that were groundbreaking of the time per that was free nights and weekends, free incoming calls, and unlimited calling. we had not done these things before because, quite frankly, we did not have to in the era of local duopolies. in this competitive era, it was hard work to remain ahead of the competition and the most innovative were the ones who were rewarded. unfortunate, all that started to
change in the middle of the last decade. it was around that time that we began to see humvee debbie be -- how empty dump d -- began to see humpty dumpty being put together again. concentration of market power has led to less choice of consumers. at&t, specifically, has done that via exclusive bills on handsets and by withholding roaming agreements and by leveraging its control over device spectrum. this was only possible because regulators were asleep at the wheel for much of the last decade. as everyone in the industry
analyzes every aspect of this acquisition, policy makers have this question before them. are we entering the era of the nationwide duopoly or will we provide a landscape in which a second competitive era might blossom. there is no third option. neither at&t will be allowed to acquire t-mobile, paving the way for verizon to possibly acquire sprint, creating a national duopoly, or will it not? policy makers must begin preparations to regulate every aspect of the day-to-day business of the duopoliests. that is why this acquisition must be denied and why it is in the consumer's best interest to chart a new course toward a competitive era of wireless. it is as simple and critical as that. but, in closing, the very good news is that this takeover can
be stopped. you can lay the foundation for a new era of national competition, where jobs are created throughout the land, a truly competitive very with a wide variety of creative minds that are still needed it to deliver broadband wireless networks, high-quality high-speed net cords that our nation deserves and demands. >> thank you very much >> thank you for the opportunity to beat up -- thank you very much. >> think you very much for the opportunity to speak. i would like to begin with a short video.
>> that commercial illustrates the situation i have today, the place where customers can offer high-tech services while making fun of their competitors. but if this merger comes to task, the wireless market will be transformed to some degree different. we will go back to the days when this phone was in use. only two companies ruled the cellular-phone market, resulting in higher prices for consumers and little innovation. in 1993, a year after this phone came to market, congress created the wireless market we now enjoyed by empowering the fcc to auction spectrum and great more competition. that policy worked. prices dropped. innovation exploded. consumers benefited. over the years, industry
consolidation has gradually eroded that competition. if this deal goes through, that era of competition and innovation will come to an end. consumers know this already occurred almost five dozen individuals have written to the fcc -- almost 5000 individuals have written to the sec. t-mobile customers are irate. a blog 40-mobile customers show that about 7300 consumers are opposed -- a blog for t-mobile customers show that about 33 to customers are opposed. more than 1000 people have signed our petition. these are not astroturf campaigns. these are real americans seeking to preserve competition that rates far better than that at&t in customer satisfaction. if this merger is approved, two companies will control 80% of the market.
sprint will become a takeover target. worse than a duopoly is a monopoly. gsm handset manufacturers will be forced to negotiate with one national company. application developers will also be subject to a limited non- competitive market. while t.-mobile was the first carrier to sell devices with the open android operating system, at&t has worked to block applications. if at&t is concerned about spectrum capacity, it can stop operating three types of networks. it is an inefficient system that results in 70% to 90% of its spectrum to be used. allowing at&t to buy tea-mobile
for the purpose of -- tvs mobile for the purpose of improving -- t-mobile for the purpose of improving network capacity -- it can do so now. there is no short of spectrum in rural america. a hint -- at&t is planning to spend $39 billion on this merger, money that could be spent to provide better service to more americans. if at&t can create more jobs, it can do that without buying out a low-cost competitor. this will be no different as thousands of workers in retail stores will be let go. this transaction is a pivotal moment in the u.s. antitrust law. if that law means anything, this classic merger of one company smaller competitor in the same business must be denied. this merger is on fixable -- is
unfixable. thank you. i look forward to your questions. >> thank you very much. >> good morning. i am larry cohn, representing thousands of workers in both the network and the content sides of this industry. we look forward to this review. at the end of these inquiries, we believe there are three key points. first, this merger represents an opportunity for this country to accelerate high-speed broadband deployment. second, the transaction, with conditions, can positively impact consumers. third, absolutely, there is a
record year that, with the right conditions, will increase jobs, both directly in the surviving company and in the key economic development that it can bring to rural america. four years ago, we launched the speed matters campaign to show the importance of high-speed broadband for america's future. distant learning and smart cards have enormous potential. but they will remain beyond the grasp of millions of americans unless we're able to accelerate the development of true high- speed wired and wireless broadband networks. the u.s. now has fallen behind 25 other countries, including romania, in the capacity of our broadband network. the president highlighted this in the state of the union. we have no path to closing this gap. our view is that this merger, with conditions and commitments
made by a t-mobile and at&t, is a critical way to bridge the gap that exists. it is critical for rural america and for economic development. at a particular points, and these would be in the commitment, 97% of the population. only 20% of u.s. broadband subscribers. it is about data speed and we saw that today with microsoft's announcement to spend $8.5 billion to buy skype. it can be data over cable, and data over wireless, and the effects of this merger are
significant to rural americans. we need spade, those can be conditions of this merger. it is not whether t-mobile will survive as an independent competitor. bacon not be forced to make the investment -- they cannot be forced to make the investment to 4g. this is an open and shut case. at&t will comment -- will commit and conditions can be applied on the merger that provide for when investment will be made, what the speeds will be, what pricing will be. that is an opportunity that this country cannot afford to mess. we are falling behind in the global economy because of these
infrastructure needs. at&t has the financial resources. sprint has committed to three incompatible technologies. they are already beyond their own rates. at&t and t-mobile have current compatible technologies. finally, this merger is good for u.s. workers. in not a single case have workers lost their jobs and we believe the conditions can be applied to this merger. the fcc did it with the bellsouth merger. there was no loss of employment. it was good for workers and it was good for those communities. similar conditions need to exist in this merger.
in a long term, the expansion of the network called the potential to create thousands of new jobs both in the industry and in the communities. thank you. >> we will now start a round of questions. 7 minutes per senator. one of the major concerns at of this merger is what it will mean for prices consumers pay for service. in addition, t-mobile has been a price leader. undercutting prices offered by your company, a rise in, and sprint. t-mobile offers an unlimited voice, text, and data plan for $35 less than a comparable plan your company offers. why is it not logical to assume that the loss of t-mobile will
cause competition to erode and prices to increase? >> this is an unequivocal a one of the most competitive industries in the u.s. today. in terms of wireless industries around the globe, probably the most competitive around the globe. one of the best ways to evaluate that is looking at pricing. if you look at the last 10 years, there is been a number of consolidations. over this 10-year time horizon, it does come down by 50%. if you take a snapshot of the last four years, it is all about mobile data right now, in the last four years, since we launched the iphone, the pricing for a megabyte of data has come
down by 90%. what is driving that? it is competition. regardless of what market you are in, 74% of the customers in the u.s., they have an option of five or more wireless facility based providers. this is a vibrant, active market competition. if t-mobile and at&t combined, i did not see that it will not change the trajectory of pricing in the industry. we are at a situation where we are capacity constraint. t-mobile is as well. we have markets where we are within one or two years of failing to have sufficient capacity to continue growing our networks. there is only one byproduct of that and that is pricing war rationing byproducts. putting these two companies together creates new capacity. we can go into the details of that, but sitting -- but freeing
that the spectrum allows us to grow capacity. capacity is the basis for moving prices down in this industry. putting two companies together creates capacity and prices continue to move down. >> in your testimony, you said, going forward, if this happens, it would be difficult for any company to challenge the duopoly even if they reduce quality, raise prices. if this happens, i take your comments to mean that you have real concern about your ability to maintain yourself as a national competitor in the market to -- and the market.
is this concealable? >> it is conceivable, yes. it would make our position more challenging competitively if you put 80% of the revenues in the hands of the two companies, i believe they would have pricing power. it would give them tremendous scale advantages. they would become a gatekeeper for new applications. they would build it for one of the two bells and they would always give first. because of their size and scale in terms of innovation. what this hearing -- what has not been discussed enough is outside of the wireless industry. the vertical integration of the to and that is the control over the last mile.
that is a huge piece of the cost structure. i am the chairman of the ctia. one of the issues we have had its special access. it goes back to a local land line carrier in the form of payment for special access. those rates are very, very high. there is a fundamental conflict of interest at at&t and verizon are able to -- to get the industry to oppose and its weight behind reducing special access because of the verizon and at&t people that are not in the room. as prices come down for special access to us, we did make wireless service less costly. as wireless service becomes less costly for consumers, it celebrates -- it accelerates
court cutting of the local land lines. the two bells do not have an interest in excel rating discord cutting or substitution of wireless for wireline services. it does make us more of a takeover target overtime as the competitive environment it's more difficult for sprint. >> we may go from three to two. that is something that we want to see happen. i would like to respond to that and respond to your question -- to your comment on spectrum. scarcity. your chief technology officer this year stated, i think there has been a belief -- that is not the case in the near term or the medium term. if you look at the bottom spectrum that t-mobile has
today, our ability to grow in this space is much stronger than our competition, so we are in a good spot and we did not have a shortage of spectrum. he said today that you do have a shortage of spectrum. >> both things are correct. what he was referring to is that we have on the short-term to grow our data revenues. what he -- what is not mentioned in the " is that we do not have enough spectrum to launch gsm networks. we cannot start the roll out because we do not have the spectrum. the other thing that is important to realize is backed -- it has taken two or three years for it --.
from that point of view, we see it as being spectrum constraint, in the medium term. the other constraints we are having in the market is to do it on our own. >> ok. i want to make the point that if we go from 4 to 3 and then we go from 3 to 2, that is pretty serious. we will come back to that. mr. lee? >> thank you, mr. chairman. i would like to start with mr. stevenson. some of your critics have noted that at&t has more unused spectrum than any other wireless carrier not go -- what other wireless carrier. could you tell us why you have yet to fully utilize your existing spectrum holdings?
you are seeking to acquire new spectrum through this acquisition. >> i would be glad to. as we have discussed, we are aggressively moving to launch the fourth generation of global broadband technology. this is a technology that will begin to give us 10 or 15 experiences for the consumer. in our industry, we launch technology, and this is a very fast-moving industry, five years ago, we began to move from second-generation to third- generation technology. to make the move, you have to have a clear block of spectrum to deploy the new technology. we began deploying 3g technology. that business is growing dramatically. 8000% growth. the speed benefits, but it is
more efficient with spectrum to make that move, we have to have clear blocks of spectrum. on this spectrum. nothing can be in the spectrum. because of the data, we need 20 megahertz of continuous -- continuous spectrum. we've got a number of places to piece together this footprint. we went to the government auction, $7 billion in the government option to buy 700 mhz. that is where we are going to put this high-performance networks. we're building into the spectrum now. we also acquire a company a low of communications which had a block of spectrum that we were able to appear together with what we bought from the fcc. we still a number of markets where we do not have a footprint. we have been out pursuing and i expect from the best weekend. we do not have enough spectrum
to deploy this nationwide, but the spectrum is on his today because we are the attack -- is unused to date. >> if you were unable to acquire t-mobile, what would your options be as far as developing the network? >> it is a long-term solution. we would not have the spectrum death to do the conversion that we need. this is one of the big determinant as to whether we can get to a lot of the rules committee's trade -- the rural communities. we do not have enough spectrum to launch in west virginia. this would allow us to cover a large portion of west virginia. >> would this nation be better served by a smaller number of providers with access to more spectrum that would be by a larger number of providers, each with access to smaller spectrum
holdings? >> that is a public policy question. would i would tell you today is there are a number of companies out there that are aggressively deploying fourth generation technology. a lot of them are deploying it quickly because they're doing leapfrog approaches. dance company owns the majority position unclear wire. company owns the majority position in clearwire. metro pcs is doing a leapfrog technology belt. there was an article today it this week. they will launch a fourth generation network. i do not think fewer companies is better, but i do believe we have a public policy objective, of getting to 97% coverage of mobile broadbent, that is an
additional 55 million people. we're going to have to think differently and allow companies to make better use of the spectrum. >> let me ask you a related follow-up question. there are those who say it will result in a duopoly. i realize that you will disagree with that assertion. d believe that -- do you believe that further market concentration is likely to result in more regulation of your industry? >> i cannot judge what happens with the regulation. from my viewpoint, this is a hyper competitive industry. additional regulation does not seem warranted or likely. we have a history of in terms of what happens to pricing in this industry. i keep going back to options available to the consumer in this industry are dramatic. and we keep talking about gun
from 4 to 3 or 322, if you just look at the last quarter, we tend to skip over metro pcs. this is a large scale competitor. they added over 700,000 subscribers in the last quarter. sprint, 1.1 million. this is anything but a for going to three and a 3: 22. >> thank you. some of your public comments have suggested that sprint might not survive and at&t-t-mobile merger. is that your position? >> my position is that it would make it more difficult for sprint to compete. i have never said that we would not survive. in that environment, the real question is, if this were
approved, my view is that people are fundamentally making a decision. this is a duopoly. it puts us in a position to be acquired. >> ok. ok. sprint is the third largest provider in this industry. it has recently increased its subscriber base. it offers a wide array of popular products and handsets. in light of those circumstances, what obstacles stand in the wake of sprint continuing to play a role as a robust competitor in a post merger market? >> in terms of continuing to improve the disadvantages we have in areas like special
access, might ally is going to be silenced. i work in washington to try to get access rates reduced. at a certain time, it becomes a. too far. you ask the question earlier about regulation. we traditionally have opposed increased regulation by the fcc in the wireless industry because we think the market is the best form of regulation. recently, we supported the fcc regulatory approach to running. the reason is because they're running alternatives -- we are already seeing signs of more regulation in our industry and this is the other downside. as far as -- i am concerned about how big the pie gets, how robust and vibrant the entire industry is. as much as what our relative share is of that industry.
with more regulation and less innovation, the pie will stop growing as rapidly and there will not be as much investment. companies would be less willing and interested in investing in the growth of sprint and the wireless industry becomes more regulated and does not grow as fast. >> leading to less competition, is that your position? >> yes, addis. >> thank you very much. >> i come at this as someone who is in private practice for 14 years representing a number of different private phone companies and arguing that competition was really good for the market. that would bring prices down. i come in as a center that also serves on the commerce committee. i put forward a cell phone bill of rights and every time and time again from the cell phone companies that it is not necessary because there's so
much competition that we do not have to worry about things like early termination fees being pro rated because competition will bring is there. by first question -- i wrote to a letter and it was a few days ago. are you prepared to commit to offer your customers t-mobile current pricing plans? >> the t-mobile customers will be offered their own rate plans into the future. but we have always done that. when you think about the at&t customer is -- >> lee at&t customers get t- mobile prices? >> at&t customers, if they wanted the t-mobile pricing plans, they add that those options for a long time now. the latest industry works, the day, we still a $400 iphone for $50. we put $350 into a product like
that. we ask our customers to sign a contract ended a two-year contract to establish a business relationship. our customers, we will ask them to stay with their contracts. we will honor the t-mobile customers contract into the future. >> what about it a t-mobile customer needs a new phone? i need a new phone, but i -- delighted to keep my t-mobile rates? but if you get a comparable fund. >> held up the monthly customers with t-mobile? >> absolutely. we've got those break into our billing system. >> can you say here under oath
that this will lead to lower prices for consumers? >> i can tell you that history has demonstrated that these mergers have traditionally generated significant cost synergies and capacity benefits which have translated into cost savings. >> in your testimony, you discuss sell at&t believes regulatory officials should look at the proposed merger. how am -- i did it with think of the wireless market as a national one. part of my thinking is attributable to the marketing of national providers. you look at your own web site and it shows that your company likes to sell its sell to consumers as a national company. i found marketing materials claiming that at&t national coverage of the print is getting even faster with clergy -- with 4g.
there is another web page explaining that at&t is superior because they do not have a national network. my first question is, does at&t still different pricing plans for different regions of the country? >> it is about. there are a number of markets specifically where we compete against metro pcs were we do a unique promotions. miami would be a good example. >> do you sell your model handsets >> we sent to standardize our product sets and are handsets selections over the various geographies. our company is set up, we have organized this company to
compete on a localized bases. i of folks who run different regions of the u.s. and i have people who run specific cities because i need them responding, promoting, advertising, and addressing the market on a local basis. that is the way the customer's decision is made. the customer goes into a store in minnesota or wisconsin and makes a decision based on a competitor in the marketplace at that time. >> ok. we will get back to that. >> we are a regional company. we have no customers -- every customer is interested in a national plan. >> thank you for clarifying that. >> as concentration in the wireless industry has increased by almost 32% since 2003,
capital investment has decreased from $25 billion to $8.9 billion over the first half of 28 -- 209 break -- 2009. do you expect this trend of declining capital investment to continue? how would competition -- how would less competition and help us? >> we do not expect a reduction of capital investment. note is the answer, we do not expect it will lead to reduction. but there has been less investment over time as competition has gone down. >> we expect that with this transaction, as they are realizing synergy is,
competition will increase trade with the increasing competition, we should see investments. >> you have a different view on the spectrum issue. i have a little bit of time left. could you discuss your view on the spectrum? the notion that it has been discussed that this merger has to take place because the specter of issues. >> basically, at at&t has all lot of spectrum's that have not been -- one-third of its spectrum's has not billed out yet. secondly, it uses the spectrum very inefficiently. is using three different generations of technologies and there are technologies that they can use right now i want to get to that 20 mhz continuous spectrum. that ignores technologies that would allow companies to
abrogate in the spectrum. the other technologies that improve the spectrum of efficiency. it also ignores at&t ability to reconfigure the network to provide 20 megahertz. i think the spectrum crunch crisis is a bit overstated. >> thank you. thank you very much. >> thank you very much. >> as i said in my opening comments, my state is rural and some parts of my state where receiving consistent telephone service is questionable. when they do, this service is not as fast as what someone in a larger city would receive. since announcing the merger, at&t has said it would bring faster networks to those areas. for mr. stevenson, if he would
want to comment on this as well. how will this merger help constituents like mine get faster mobile service and secondly, carriers have to pay fees to the national providers when customers traveled outside the coverage area. what effect the merger have on the places where you have to pay? >> i can take that one. sorry. >> it does not matter. either one of the. >> at&t has the ideal spectrum today to serve rural areas. they have significant holdings of 700 mhz. there is nothing in the t-mobile bill that makes building out any more attractive in the future than it would be to the.
as far as the fees are concerned, one of the biggest challenges that we have faced is trying to get a running agreement with at&t. especially a data rowling agreement. even after the fcc demanded data roaming and ordered it, april was just last month, but we have been told the rowling person is out of town. it is very important to answer your question. it is very important for carriers to be able to provide service that allows their devices to worked in a word that the user does come anywhere in the country. it is awfully important. >> mr. stevenson? >> in response to the running, we have a number of rowling deals of around the u.s. for
providers. the fcc rules have established how that process should work. we're open for business on it iv services as it relates. he is on a different technology then at&t operates on. i would be glad to talk to you after that and i would get something going. >> we have a gsm property in north alabama. >> a lee phelps midgut -- will you folks negotiate on your own? [laughter] >> the acquisition does facilitate places like iowa. there are two blocks of spectrum that will build its infrastructure into. one is the 700 mhz. that is where t-mobile operates today. that is the elegant of this transaction. we will be able to do a number
of things and -- to free up spectrum. delilahs to pregnant into the spectrum grants in places like i love. -- in places like iowa. -- 281 newthe city's cities in iowa that would not have it otherwise. they will focus primarily with our original bill, this will allow us to build the highways, and another 181 cities. that number nationwide is 51 billion people. why this is so important is because we cannot get there because we do not have at trump -- adequate spectrum to build up these communities. it is about 80% of the u.s. population parade that is 14.5% of the land mass in the united states.
to get to 97%, it has to go to 55% of the land mass covered. that is wide spectrum is so vital and critical. that is why we think it is so important. >> i think you touched on this next point. that service is more limited their in other areas and t- mobile does that even offer service in that region, which means there would be no change in the region. what with the merger do to change the economics of providing service to rule america -- rural america? is there something that you cannot do any more? >> the city will require some effort. i think we can do it. t-mobile, their spectrum is held
largely by a number of partnerships. i do not know exactly what those look like. we will have to get in and sort of those partnerships, but we to have access through some of medium to the spectrum to provide service. if not, we have 10 megahertz and we could take some risks and launched it would 10 megahertz. i've a lot of homework to do to notice that the weekend do. >> this will be my last question. in 2008, the justice department approved a merger between verizon wireless and altel. what are the differences and door similarities between the proposed merger and the verizon merger pact should spectrum be divested in the markets where
at&t and t-mobile overlap? >> do you want to go first? >> this consolidates much more power in the hands of to the the previous merger. the acquisition target is much larger as well. the other thing this merger shows that did not do much for the competitive landscape. those assets of the acquired, it was given extensive review by justice. we acquired 850 spectrum. it allowed us to put our own network and the structure in place. a lot of these communities that go through wyoming, montana, etc., and it gave us a footprint in those markets where we did not have been at work and a footprint before the. we have converted those networks
to our technology. that was 3g in nature? >> this industry, we launch services and the obsolete very quickly. putting in three- g. we cannot just go in and take millions of 2g customers off the air. we cannot afford to do that. you cannot afford to do that. we have to be very elegant and how we transition technologies. they take time to work our customers through the various technological challenges.
>> thank you for holding this very important hearing. i am sure i not the only one here remembers when ma bell controlled how we communicate with each other. when i was a kid, every sunday at exactly 9:00 a.m. in minnesota, my grandmother would call from new york and talk to my father for precisely three minutes. [laughter] my grandmother was german and my dad -- at three minutes, that operator guide on the phone and told her the three minutes were up. and ended the call. that was the only time she got to talk to her son and grandchildren and thankfully,
the break up forever changed the cost of long-distance service. we live in a world where it voice-over ip and video conferencing that would not be possible without speed. i fear that if -- the merger would take us one more step. one step away from the monopoly markets that we had under ma bell. it took the department of justice more than 35 years. it is important to keep in mind the stakes of the merger of this size and scope. i hope, chairman, this will be the first of several hearings on this proposed merger. we all know the merger is going to raise eyebrows -- raise prices for american families and may cost thousands of jobs. i hope we will hold a second hearing once we have more solid economic data.
i want to follow on your comments on the national aspect of this deal. i want to ask two questions i want a yes or no answer to. after that, i promise i will let you actually respond. when you were seeking to acquire horizon wireless spectrum in 2009, did you state that evidence shows that the dominant forces driving competition among wireless carriers operate at the national level? yes or no? >> i do not recall the comment. >> ok. i said yes or no. [laughter]
>> i did not know, i am sorry. >> isn't it true that you have seen a significant growth in new customers in large part because you were able to negotiate an exclusive handsets deal for the iphone with apple that would not have even considered launching their new phone with a small regional player. >> if you are asking yes on the quotes, i do not remember it. >> isn't true that u.s. the significant growth in new customers in large part because you are able to negotiate an exclusive handsets deal for the iphone and apple, a large national company. >> i would say no.
look at europe. >> now you can explain. >> you do not think that apple gave you an exclusive on this because we did they would have given an exclusive to a regional player and not to one national player? >> in europe, they did spread it around. >> ok. my point here is that you did say the thing and forgot to say. you do advertise as a national company, talking about how national you are. my point is that your business is a national business and that is a large parts because the wireless market is a national
market or you can achieve significant competitive advantages from a national presence. my question is, this deal should be analyzed locally. this deal should be analyzed locally, which goes against the statements that he made before. >> this is the way the department of justice has required these transactions to be reviewed. these buying decisions are made at a local level. our experience is that the buying experience is made the local level. having a national coverage -- i think is very important. i believe that is why he advertises is national map off of is website. that is is national coverage map that advertises.
>> absolutely, we do. >> i would love to see your national map. >> it looks very comparable period -- a very comparable perio. it would look very similar. i am still trying to get my head around all the technologies surrounding wireless. roaming agreements, which we had some discussion about to. i know that carriers like at&t and verizon have a tremendous advantage over everyone else, because they own and control the and the structure that was built by labelle -- ma bell?
have you seen the effects of this over the last 15 years as at&t has gobbled up numerous baby bells in an effort to return to the dominance it once had? >> yes, to answer your questions, at&t and verizon were here to talk more about at&t today. for that particular -- it was a four-year exclusive period of time. you had special access. you have the rowling issues, which at&t, verizon, all of us have been in this situation. we use running agreements to make sure we had a vibrant product for our customers to
use. when at&t and verizon reached a size where it became -- it was not in their favor to offer those readily, they began to become -- it became very tough to negotiate with them on that. we've not been able to get an agreement in place with them. you have to have special access. the spill over devices, rowling issues. next-generation technology, that has been balkanized by at&t and verizon, where there is no inner opera ability -- in the pc has devices came in the 1990's will work on any network. with market concentration that at&t and verizon of the world
have, they can prevent an opera ability. those are just a few of our issues. we are wanting to see this industry return to competitive era once again. >> thank you. >> i think within all agreed that broadband access has been a very positive thing in terms of our country and the world and our ability to communicate, our ability to do business. it is mindboggling from the days when senator frank was talking about his grandfather -- grandmother. i remember the days a week that all of our video communication through the three established channels. we have come light years there. i remember those telephones and
i did not want to ever go back to that. i did not think there's any danger of doing that. as they approach this and as they recognize that this is the beginning of a process. it is not due in part of what congress does. we've written laws as it is. and now you have the -- doing their job. we look for this lengthy process for every side to this argument will be able to present their case. we look forward to reviewing that. for myself, i feel like congress ought to be very humble about our ability to predict the innovation that is going to be created. we have seen life change so much
and so dramatically over the last couple of years in terms of communications and the entertainment and the like. i would like to ask each of you perhaps -- let me start with mr. stephenson, to comment on innovation. one of the concerns is that somehow innovation would be stifled by this merger and i wonder if you would give us your views on that. >> thank you. one thing that you cannot say about this industry is that it is lack for innovation. arsine innovation go at an incredible pace. each of those are multi-billion dollar investment and that innovation is happening very
rapidly. we're already talking about what comes after 4g? there are 6 million offers -- options for customers today. to think of then i found being launched in 2007 and today, the customer can buy one for $50, that is innovation. when the iphone came out, use of google began to deploy new innovative devices. you are seeing that innovation right now. you are seeing red and black berry with a new operating systems. they run a very important wireless operating system that they have developed, combining that with a voice-over capability now. this is going to be a very exciting manifestation year.
we harassing applications at the market at hundreds of thousands of the pace, being down loaded billions of times. minister to think about this innovation cycle, i suspect that he will not delay it one day the launch of this i found five or six. i did not think it will slow global down one iota in terms of developing new operation system's capability. i do not think the infrastructure players are going to slow down. i do not see dan sullivan down as a result of at&t and t-mobile coming together. this is an exciting and industry as one could ever hope to work and. i did not see that changing. >> i have to give credit for this innovator over here, t-
mobile usa. they would be removed from the market. we followed them short lead thereafter. the u.s. lead the world in first generation, which was in a lot. it was the first cell phone. we got motorola and it was important for the u.s. government to respond and create more competition because we fell behind europe. in general -- we fell behind because of a lack of innovation in the u.s. wireless market. they opened up the u.s. market to more competitors. i disagree with larry in terms of your we stand in the world. the u.s. is now number one in the world in terms of wireless technology.
we have the most -- customers. we're the first with 4g. google and apple and microsoft, all of these innovative companies, they developed on our shores for a reason. this is a very vibrant market. my concern is that if we go back to a duopoly, we will go back to pre mid 90's in the u.s. and it will fall behind the world again like we once did. we will lose that edge that we have we gained. >> my time is running out quickly. you mentioned that t-mobile did not have the capital to do these sort of infrastructure investment that motivated our company to engage in this
acquisition, this merger. you talked about how much money at&t has invested in broadband infrastructure. i remember when congress passed the stimulus legislation. there was $7.9 billion included in that because of the desire of congress to seek somehow a bill doweled expansion of broadband for all the reasons we understand. my personal preference would be to see the private sector make those investments, not the taxpayer. how does this merger of fact either positively or negatively the ability to -- of companies to make that sort of investment? this is a problem and i would like to hear your views. >> i will go back to the president's comment, establishing a public policy objective of 98% of america covered.
-- this is a private market solution with a major public policy objective. this is all private capital, there will not be any universal money, any taxpayer money involved in making this happen. if you think about getting to 97% coverage, at that is 3% of the u.s. that we still do not have the ability to cover. focusing on the 3% is a much more manageable objective than the 20 or 10% you're talking about now. this is a very elegant potential to address public policy objective of private capital. >> go ahead, sir. >> i have made points earlier
where we do not believe that this merger facilitates this goal in any way. even if you believe it or the case, at what cost? is it worth eliminating a very robust competitive, extremely important and history to the u.s. economy in order to achieve that goal? the answer is no. >> thank you. >> thank you very much. at&t's states backed it does not view t-mobile usa as a competitor. let alone as a major competitive threats. this statement is incorrect, given the large amount of competition that we see every day between these two companies. what is your view of that statement? does t-mobile view at&t as a competitor?
>> reseat its overall in the marketplace to be a repetitive marketplace. we define ourselves as a logic competitor, companies like sprint, all you can eat players. >>you two are competitors, right? please. >> we are competing in the same markets. >> mr. stephenson, t-mobile is a competitor. you are competing with that man every day. is that correct? >> they are part of the competitive at the system in wireless technology. >> you to our major to competitors. -- you two are major competitors. >> yes, sir. >> ok. on the website, you compare your
prices for data services to at&t's and announce that your price for unlimited data service is $5 cheaper. you also promote the fact that your unlimited voice and data service is $35 cheaper than at&t. this is pretty good evidence? you backseat at&t as a competitor. >> -- you see at&t as a competitor. >> we shall the customers the savings that they can make. >> that is what we do with competition. >> at&t and verizon. >> of course. >> how can you say that t-mobile is not a close competitor? is it really credible to sit
here and tell us that you aren't close competitors? >> they are not our competitive focus, i will tell you that. a look at the last quarter, you can tell where our competitive focus is. t-mobile lost customers in the first quarter, they are not our competitive focus. >> consumer advocates argue that one of the motivations for this deal was to remove the price competition offered by t-mobile. do you deny that removing t- mobile as a price competitor was not at least one element in your motivation for spending $39 billion to acquire this company? >> i did deny that, senator. that does not factor into the equation. the focus of our competition right now is at the high end of
the market. frankly, we are limited in capacity. we only have a certain amount of capacity to put to customers and we give very focused on what customers to go after. if we were to get this transaction done, and we increase the capacity in the marketplace, that gives us an opportunity to move down market and we're looking forward to competing against metro pc yes. -- pcs. >> you argue that we should examine this on a local market to market basis. i find this claim remarkable as this is directly opposite from the position that at&t took in prior mergers. at&t wireless argued